Heineken’s shares slid more than eight per cent in July when it warned that annual volumes would be broadly stable, rather than grow. On Wednesday, it said it expected volume to “decline modestly” in 2025.

Annual organic operating profit would also be at the lower end of its previously forecast four to eight per cent range, the brewer said.

CEO Dolf van den Brink said macroeconomic volatility had become more pronounced in the third quarter.

“We expect demand to recover when conditions normalise,” he said in a statement.

Analysts already expected annual profits to rise 3.9 per cent, and for volumes to decline by 1.8 per cent, according to a company-compiled consensus.

As a result, Heineken’s full-year commentary may be welcomed, said Laurence Whyatt, analyst at Barclays.

“All the negative stuff was expected. And in fact, it was expected to be worse,” he said.

Heineken shares rose almost one per cent in early trade, Oct. 22.

Brewers across the spectrum face long-term sales declines in some markets due to rising health concerns and disruptions from beer alternatives or even the emergence of weight-loss drugs.

But Heineken said its key challenges in the quarter, including weak demand for beers in Latin America and Europe, were short-term in nature.

Consumer sentiment has been rocked by trade tensions in key markets such as Brazil, where shipment volume in percentage terms contracted in the mid-teens, and Heineken has struggled to regain lost shelf space in its home region after a pricing dispute with retailers.

But it also reported market share gains in Brazil and Mexico, and a strong showing in previously difficult markets such as Vietnam.

The company reported a 0.3 per cent decline in third-quarter net revenues, just beating analyst expectations for a 0.8 per cent dip. Its 4.3 per cent volume decline was broadly in line with forecasts.

— Reporting by Emma Rumney

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As spring sunshine warms the fields, Konen, 65, and other barley farmers worry tariffs will take away crucial export markets and increase the cost to grow the grains, even as sinking U.S. beer consumption has slashed demand for barley.

Why it matters: Reciprocal tariffs from Canada and Mexico may raise costs and limit export opportunities for U.S. barley growers, at a time when beer demand is also falling. 

“Down here on the farm we’re already stretched pretty thin financially,” said Konen, who is also vice president of the National Barley Growers Association. “It makes us wonder whether or not we can even stay in business.”

Roughly half of Konen’s barley is destined for Mexico, where it will be turned into beer. Some will be shipped back to the U.S. in bottles of Modelo, Corona and Pacifico.

Mexico is the third largest importer of U.S. barley and the biggest importer of U.S. malt, made from germinating kernels of barley and a key ingredient in beer. If Mexico issues tariffs in retaliation or switches to buying barley from other trading partners, experts say it could deal another economic blow to American farmers as U.S. consumers increasingly ditch beer.

Tariffs may decimate U.S. malt barley exports to Canada

Canada, the largest importer of U.S. malt barley, issued tariffs against U.S. barley and other agricultural goods that went into effect on March 4. Frayne Olson, crop economist at North Dakota State University, said farmers are worried that tariffs could decimate U.S. barley exports to Canada.

U.S. President Donald Trump has said his back-and-forth tariffs against major trading partners are intended to curb the flow of illegal drugs and migrants into the U.S., and has downplayed the market impacts for U.S. companies and consumers.

“The people who pay for tariffs are the farmers,” said barley farmer Steve Sheffels, vice president of the Montana Grain Growers Association. “We grow way more barley than we can possibly consume, so if those markets go away, then farmers are going to be competing for a much more limited number of buyers.”

Costs for fertilizer, which is mostly sourced from Canada, will rise with tariffs. Prices for imported crop chemicals from China have already risen because of tariffs that took effect on February 4.

“There’s a sinking feeling and a feeling of dread that things are bad, and things are going to stay bad for a while,” Sheffels said. “We are scared almost to death about tariffs.”

Beer consumption slowly declining

Beer consumption in the U.S. has been sliding and in 2024 it hit its lowest level in over 40 years as more Americans chose other alcoholic beverages, said Bart Watson, chief economist at the Brewers Association. Recently, hard seltzer drinks and canned cocktails have posed particularly bruising competition to beer.

Others are giving up alcohol altogether. Gen Z-ers and millennials are drinking less than most previous generations, according to a 2024 Gallup poll. In January, former U.S. Surgeon General Vivek Murthy called for cancer warnings on alcoholic drinks. Multiple high-profile studies have stated no amount of alcohol is safe to drink.

Watson believes major beer companies such as Anheuser-Busch, maker of Bud Light and Michelob Ultra, may keep prices steady to preserve market share and maintain sales volume. Craft breweries may be less able to absorb higher costs and are likely to raise prices, he said.

The 25 per cent tariffs the White House has slapped on metals will likely hike the costs brewers pay for kegs and cans, which are often made from steel and aluminum imported from Canada.

The price of a bottle of Corona or Modelo, both produced in Mexico, may be more likely to spike if U.S. malt is subject to tariffs by Mexico as it heads south and the finished beer is slapped with tariffs again as it is shipped north.

“Breweries are going to have to choose to pass this along or choose to eat it,” Watson said. “It will have an impact.”

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“Across Canada, there’s about 1,200 breweries. I can guarantee you, just about all of them are using oats to some degree,” he said today at the SaskOats annual general meeting in Saskatoon.

Heise, who is president and chief executive officer of Regina’s Rebellion Brewery, estimates his operation uses about 100 pounds of oats per batch of beer, and uses oats in about half of its beers.

“An individual brewer isn’t probably using a whole bunch of oats, but as an industry, it ends up being a significant amount.”

Although oats have been used as an ingredient in beer for centuries, for both health and trade reasons, Heise says this most recent surge in use in Canada has happened alongside the growth of the craft beer industry, which began in the 1980s.

One of the most popular types of craft beers in North America is the India Pale Ale, (IPA), which features hoppy flavours and intense aromas.

One style of IPA beer, hazy IPAs, is custom made for oats, Heise said.

“Hops can be a little aggressive and bitter, so the oats really help smooth that out. It creates this textured mouth-feel creaminess,” he said, adding the oats add the desired haziness.

“There’s this ‘haze craze’ going on in craft beer. That’s why the oats are really taking off. Every single one of us (brewers) is using a ton more oats than we ever have before.”

Oats are also commonly used in stouts to add flavour and texture.

And in recent years, brewers have begun to discover additional benefits of using oats in beer, in terms of both brewing and marketing, Heise said.

“It actually improves fermentation and yeast health, and that’s really critical to get a nice, clean tasting beer,” he said, adding that using oats can also help improve shelf stability.

“I think it’s phenomenal — the marketing around oats as being healthy is not a bunch of BS.”

Unfortunately, he said his brewery’s oat use isn’t likely to have much of an impact on Saskatchewan oat producers’ overall profitability, despite the fact he’s happy to pay a premium for locally produced ingredients.

“I don’t think much of that ends up in your pockets. We are a very, very tiny part of the oat market, but we’re doing our part to try to boost those prices up.”

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Carlsberg Group on Wednesday announced an all-cash deal worth $4 per share for all shares of Waterloo Brewing, which bills itself as the largest Canadian-owned brewery in Ontario and a pioneer of the current “craft brewing renaissance” in Canada.

The deal still requires court approval — and approval from TSX-traded Waterloo’s shareholders, although Carlsberg has already signed up Waterloo company directors and officers holding a combined stake of about 39 per cent, with “irrevocable” support and voting agreements.

A committee of Waterloo independent directors is also recommending the remaining shareholders vote in favour of the deal, on which the two companies expect to close early in the first half of the new year.

In business since 1984, starting as Brick Brewing and rebranding in 2019, Waterloo Brewing produces the Waterloo line of premium craft beers and a “value” brand, Laker.

It also holds the Canadian rights to Seagram Coolers and the LandShark and Margaritaville beverage lines, and already has been producing Somersby cider in Canada on Copenhagen-based Carlsberg’s behalf since 2020.

“One of the priorities of our SAIL’27 strategy is to grow our business in attractive markets where we are small today, such as Canada,” Carlsberg CEO Cees ‘t Hart said in a separate release Thursday. Buying Waterloo Brewing, he said, “significantly improves our growth prospects in the Canadian market.”

“This exciting opportunity will scale our business in Canada. The brand portfolios are complementary. Local sourcing will secure long-term robustness of supply, and increase commercial flexibility and speed to market for innovations, step-changing the way we operate,” Carlsberg Canada managing director Anders Rud Jørgensen said in the same release.

Waterloo Brewing’s portfolio of “long-standing co-packing relationships will benefit from these combined operations,” he added.

“We’ve enjoyed a close relationship with Carlsberg and are excited about becoming part of one of the largest brewing companies in the world,” Waterloo Brewing CEO George Croft said in Wednesday’s release, adding the the board “is confident that joining Carlsberg is the best long-term solution for our employees, partners, customers, consumers and community.”

Waterloo on Wednesday also announced results for its third quarter ending Oct. 30, reporting declines in both net revenue and gross profit in what Croft described in a separate release as “a challenging year for the industry.”

Waterloo said it’s “continuing to see consumers trade-down as a result of ongoing inflationary pressures,” which has led to sales growth for the Laker brand but has “negatively impacted the company’s premium beer brands and ready-to-drink products, which is putting pressure on gross margin.”

Waterloo has since raised the price on its single-serve 473-millilitre Laker cans, a change it said is “consistent with the balance of the industry and will have a significant and positive impact on gross margin in the fourth quarter.”

The company also reported renewals with “strategic” co-manufacturing partners, which it said will result in about $18 million of combined revenue over the extended terms of those contracts.

For its last full fiscal year ending Jan. 31, 2022, Waterloo had booked $5.803 million in net income on $180.825 million in gross revenue, up from $3 million on $156.8 million in the previous fiscal year. — Glacier FarmMedia Network

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China’s General Administration of Customs had informed the country it was halting the exports due to “lack of documentation,” the agency said in a statement.

It added that “this is first such notification we ever received, because the importing countries usually start by asking for any missing information.”

The Chinese agency said earlier Thursday it had stopped imports of Lithuanian beef but gave no specific reason.

Relations frayed after Lithuania allowed Taiwan to open a de facto embassy in its capital Vilnius last year, angering Beijing which regards the democratically-ruled island as its own territory.

Lithuanian Foreign Minister Gabrielius Landsbergis said on Wednesday during a visit to Australia that nations seeking to use trade as a retaliatory measure must be reminded that “like-minded countries have tools and regulations that help withstand the coercion.”

Britain, the U.S. and Australia are backing an EU trade case against China at the World Trade Organization over Beijing’s alleged trade curbs on Lithuania. Canada said Thursday it will also seek to join in the WTO consultations over the dispute.

“Canada is concerned by China’s recent trade actions taken against Lithuania and European Union goods and services with Lithuanian content, which could undermine the rules-based international trading system and its institutions,” Global Affairs Canada said in a statement Thursday.

The European Commission says overall exports from Lithuania, an EU member, to China fell 91 per cent in December compared to the same month in 2020.

The Lithuanian agency said the country hasn’t exported food products, including beef, to China since early December 2021. It did not immediately give further details.

“As far as I know, the Chinese move does not create practical problems, because we do not export these products to China now. The exporters have moved on to other markets,” Lithuanian Prime Minister Ingrida Simonyte told reporters Thursday.

“If the problem is procedural and bureaucratic, as China says, then it will get solved very easily,” she added.

Correct ‘mistakes’

Chinese Foreign Ministry spokesman Zhao Lijian declined to elaborate on the beef suspension, but said Lithuania should correct its “mistakes.”

“What Lithuania should do is face up to facts, redress its own mistakes, and come back to the right track of adhering to the one China principle, instead of confusing right with wrong,” Zhao said, referring to China’s policy demanding countries recognize its claim to Taiwan.

Taiwan’s foreign ministry spokesperson Joanne Ou condemned the latest Chinese move, calling it “unilateral” and “bullying” and the latest example of Beijing trying to change Lithuania’s foreign policy.

China is the world’s top importer of beef but shipments from Lithuania are minimal. It imported just 775 tonnes of beef from Lithuania in 2021, out of a total 2.36 million tonnes of beef imports that year, according to Chinese customs data.

Taiwan has stepped up its food imports from Lithuania to help ease the impact of Chinese curbs, most recently rum.

— Reporting for Reuters by Dominique Patton in Beijing and Andrius Sytas in Vilnius; additional reporting by Emily Chow in Beijing, Ben Blanchard in Taipei and Kanishka Singh in Bangalore.

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“It will be an extremely tight and difficult year for the malt processors and ultimately for the brewers as well,” said Peter Watts, managing director of the Canadian Malting Barley Technical Centre (CMBTC) in Winnipeg.

“Not only did the hot, dry summer lead to a significant reduction in yields, it also impacted quality,” said Watts, noting higher protein levels were a big issue this year.

The rains that eventually came hit right at harvest time, “adding insult to injury” by leading to quality downgrades.

Total Canadian barley production in 2021-22, which includes feed barley, was estimated at 7.1 million tonnes by Statistics Canada. That compares with the 10.7 million tonnes grown the previous year.

Preliminary data from the Canadian Grain Commission show average protein levels for barley selected for malting in 2021 coming in at 12.8 per cent. That’s the highest of the past decade and well above the 10-year average of 11.7 per cent.

Maltsters typically like lower-protein barley, and Watts noted they are expanding their specifications in order to account for the higher protein levels. “Stuff that normally wouldn’t be accepted, will be accepted this year,” said Watts.

Higher-protein malt barley create processing challenges, including reducing alcohol extraction levels, altering water absorption, and leading to hazy beer.

The larger brewing companies may adjust their recipes to use more adjuncts, such as rice or corn, to compensate for the tighter barley supplies, but Watts said craft brewers don’t have that option.

The CMBTC is currently working with higher-protein samples to come up with modifications maltsters and brewers can use to adapt to this year’s crop, Watts said.

Some export customers do like higher-protein malt barley than is typically used in North America and would be a potential buyer for higher-protein grain in a year with more normal yields, but Watts expected export movement would be down in 2021-22.

“We’re just so short this year, there isn’t enough malting barley to go around,” he said.

“We’re in uncharted territory… people are not often forced to work with this kind of quality.”

While there will be challenges, one possible bright spot to come out of the year was the fact that maltsters will be forced to work with newer varieties that they may not have selected in the past, offering opportunities for those varieties to gain traction, Watts said.

Research into how the different varieties fared this growing season was ongoing, he added, with results and recommendations for 2022 to come shortly from the CMBTC.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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The deal gives Leamington, Ont.-based Aphria a U.S. distribution point at a time when cannabis is gaining broader acceptance in that country, with four more states voting to legalize recreational cannabis on Tuesday and the Democrats promising to decriminalize marijuana federally if elected to the White House.

The merger also comes close on the heels of a recent announcement by larger rival Canopy Growth Corp. to launch its pot-infused beverages in key U.S. markets through a partnership with Acreage Holdings next summer.

While Atlanta-based SweetWater does not sell any pot-infused beverages, it is famous for its “420” beer that smells like weed, and Aphria’s CEO Irwin Simon said the deal helps his company raise brand-awareness in the U.S. and capitalize on future legalization at state or federal level.

A host of alcohol brands have taken stakes in cannabis companies, including Corona beer maker Constellation Brands, which backs Canopy, but Aphria’s purchase reverses the trend to be the first large pot producer to enter the beer market.

The deal gives the company access to a growing $29 billion craft brew market, and the company will distribute SweetWater’s 420 line and other beverages in Canada, it said in a statement (all figures US$).

The pot producer expects the merger to be immediately accretive to its earnings per share and is likely to close before the year-end.

Unitholders of SweetWater, which will become a wholly-owned unit of Aphria, will get $250 million in cash and about $50 million in Aphria stock. It will fund the deal with debt, new stock sales and cash on hand.

— Reporting for Reuters by Shariq Khan and Nivedita Balu in Bangalore.

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The total number of Canadians killed by the coronavirus edged up by 0.9 per cent to 7,773 from 7,703 on Saturday, the public health agency said, further evidence that the worst of the pandemic has passed. The total number of cases rose to 95,057 from 94,335.

Canada’s 10 provinces are all gradually reopening their economies and relaxing restrictions on social gatherings. Unemployment, though, has soared to record levels amid widespread shutdowns and market analysts say it could take years for the economy to recover.

“I am concerned about Canadians’ mental health … more Canadians have increased their consumption of alcohol and junk food or sweets since the beginning of the pandemic,” chief public health officer Theresa Tam said in a statement.

Tam, citing the results of a recent Statistics Canada survey about the effects of the pandemic, said Canadians needed to make mental health a priority.

“While social interactions and activities might look different right now, Canadians should be actively looking for safe ways to socialize, engage in physical activity and make … healthy food choices,” she said.

Almost 20 per cent of respondents in the StatsCan survey reported symptoms consistent with moderate or severe anxiety.

Last month, StatsCan said factory sales of beverages and tobacco rose by 6.7 per cent in March from February on higher demand for beer, wine and soft drinks. Food sales increased by 8.2 per cent.

— David Ljunggren is a Reuters political correspondent in Ottawa.

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“I don’t think there’s any question — without sporting events, and festivals, and concerts – that beer consumption will go down,” said Peter Watts, managing director of the Canadian Malting Barley Technical Centre.

While domestic retail beer sales were reportedly up, that business wasn’t enough to compensate for lost demand elsewhere, he said.

As a result, Watts expected to see a fairly significant drop in overall beer consumption this year.

“There’s no question that Canadian malting companies are seeing reduced demand from the U.S., given the situation,” said Watts. That will translate to lower demand from the domestic malting industry for barley.

However, while there may be a small shift out of seeding malting barley, he didn’t expect to see a large reduction in overall barley acres in Western Canada.

“Producers have had reasonably positive experiences with barley in recent years,” Watts said, adding, “I think we’ll see a drop in acres from last year, but I don’t think it will be significant.”

While malt barley prices may be under pressure, he pointed out that feed barley has shown some strength.

Also, “China seems to have been able to get their brewing industry back up and running,” he said, “so we expect reasonably good demand from China, which is a big market for malting barley.”

A Chinese levy on Australian barley imports will also inevitably drive some demand to Canada, though Watts cautioned there were still concerns that any Chinese retaliation against Canada over the Meng Wanzhou situation could spill into barley.

Statistics Canada currently forecasts farmers in the country will seed 7.25 million acres of barley in 2020, which would be down slightly from the 7.402 million acres planted the previous year, but still the third-largest acreage base of the past decade.

Updated acreage estimates will be released at the end of June.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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Beijing said on Monday it would apply an 80.5 per cent tariff on Australian barley imports for the next five years, a move expected to all but halt flows from its main supplier.

“This should benefit Canada and France that have plenty of stock this year,” Helene Duflot of French consultancy Strategie Grains said. “China won’t have any problems finding supply.”

Australia has shipped around two million tonnes of barley in the current season to China, about half of its expected barley exports.

Several cargoes of French feed barley have been sold this month for export to China, partly in anticipation of the tariff decision, traders said.

Canada and France could see extra demand for their malting barley in particular as China has fewer alternatives to Australia in that segment, whereas feed barley faces competition from other feed grains such as corn, analysts said.

However, the fresh prospects for exporters are limited.

China had already shifted toward Canadian, French and Ukrainian origins during an 18-month-long probe into Australian barley, and further widened its options by approving Russian and more recently U.S. barley for import.

“I don’t think it’s a magical shift but at least it’s some additional demand,” Dave Reimann, a Winnipeg-based analyst at Cargill’s MarketSense division, said of Canadian prospects.

China’s demand for malting barley may be less than in previous years, with Brent Atthill, managing director of RMI Analytics, a Swiss consultancy specialized in brewing ingredients, saying demand for beer in the country could fall by 15 per cent this year during the coronavirus pandemic.

Australia, meanwhile, is seen turning to the Saudi feed barley market.

— Reporting for Reuters by Gus Trompiz in Paris, Michael Hogan in Hamburg, Nigel Hunt in London, Rod Nickel in Winnipeg, Mark Weinraub and Christopher Walljasper in Chicago and Dominique Patton in Beijing; writing by Gus Trompiz.

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